Before the birth of "Three Squirrels," "Squirrel Dad" Zhang Liaoyuan was just an ordinary marketing staff member at Zhan's Food Company in Ningguo, Anhui, which specialized in pecans. He was responsible for negotiating with supermarkets and delivering goods. Later, when he was sent to Wuhu, Zhang Liaoyuan was particularly excited. He rode his bicycle with his girlfriend around the streets, proudly pointing at Century Mart and saying: In the future, our products will be placed there. Ten years later, in September, "Three Squirrels" cumulative sales exceeded 10 billion yuan, becoming the most perfect symbol of the Taobao e-commerce miracle. This story is still often mentioned by insiders in the food industry. Zhang Liaoyuan's casual promise now seems full of irony. Everyone understands: the era when the food industry could rest easy by just seizing channels has passed. Wahaha, which created a miracle in Chinese beverage sales by relying on the "rural areas surround the cities" strategy, has also fallen into a "midlife crisis." Giants like Wahaha that dominate traditional channels are showing fatigue, while new forces are emerging. The food industry has entered a "small food era" of new channels and new brands. In such a "small food era," who is the protagonist? Perhaps it is a large number of new brands whose names you cannot even name now. The decline of traditional channels and the rise of new channels allow them to break through easily. Therefore, Wang Cen of Sequoia Capital asserted: In the future food industry, many large enterprises with hundreds of billions in revenue will be born. This is destined to be an era of wildflowers everywhere. New "Food" Era! Zhang Liaoyuan's promise might be dismissed as youthful arrogance, but for Zong Qinghou, who is over 70, recalling the bold words of Wahaha's golden age is inevitably bittersweet. At its peak, Wahaha's performance entered the 50 billion club, and Zong Qinghou also vowed to achieve the goal of 100 billion. Unfortunately, seven years have passed, and not only has the goal not been achieved, but performance has also declined for three consecutive years, with a growth rate of -6.5% in 2016. In contrast, Nongfu Spring disclosed its performance for the first time that year: 15 billion yuan, a 19% increase compared to the previous year. Both are in the food industry, but their product positioning and channel control are completely different. Wahaha is famous for its channels, relying on the famous "joint sales system" model, with nearly 10,000 dealers, hundreds of thousands of wholesalers, and over 3 million retail terminals nationwide. It can distribute new products to every small shop in remote rural areas within a week. It is said that "in China, wherever there is a small shop, you can see Wahaha's products." Zong Qinghou treats dealers as partners and friends. Even when he was splitting with Danone, his controlling shareholder, Wahaha's suppliers still stood with Zong Qinghou. In contrast, Zhong Shanshan once called dealers "enemies" internally, stubbornly believing that "since I give you such a good product to sell, you should sell it well" and that "the benefits for consumers should not be taken by dealers." Although not good at dealing with dealers, Nongfu Spring's insistence on product quality allowed it to gain a foothold. Taking purified water as an example, Zhong Shanshan insisted on using natural high-quality water sources for Nongfu Spring, and the production base had to be built in the wilderness, thus bearing huge logistics costs. This made dealers very dissatisfied. Nongfu Spring's purchase price was 20 cents higher than ordinary bottled water, but the selling price was the same, so no one wanted to sell it. Therefore, Nongfu Spring's sales network has been difficult to expand effectively, often placed in the least conspicuous position on shelves. Even in its hometown Hangzhou, it suffered the same cold reception. Some advised him to use ordinary city tap water to save transportation costs. But Zhong Shanshan insisted that water bottled from tap water is "alienated" water, harmful to human health in the long run, and he would never produce it. To this day, whether Zong Qinghou was among those persuaders remains a topic of after-dinner conversation in the industry. As is well known, Wahaha has suffered several quality crises that have made it highly criticized. Looking back at the dispute between Zong Qinghou and Zhong Shanshan, one might feel: Has the era of channel supremacy passed? No. What has passed is only the era of traditional supermarket channel supremacy; now it is the new "small food era." Countless new channels are rising. Tmall and Taobao are even too traditional. Vertical e-commerce, new media matrices, new retail convenience stores, and unmanned shelves are springing up like mushrooms, bringing countless opportunities. And the beneficiaries of these opportunities are the small and medium-sized brands that were previously dispensable in traditional channels. "It's like a large truck that has already accelerated to 120 kilometers per hour; even if you release the accelerator, it can still travel for a long time," an industry insider described Wahaha's current state to Pan Yuefei of Zinc Finance. While small brands are accelerating, Zong Qinghou and Zhong Shanshan should both realize: The spotlight in the food industry has shifted. Traffic Offensive and Defensive Battle "Do you know which food brand Zhang Liaoyuan is most focused on now? AKOKO cookies, that little biscuit company that made nearly 100 million yuan in a year." For most consumers, the name AKOKO cookies is far less familiar than the four characters "internet-famous cookies." Perhaps they have not yet realized this change: remembering Three Squirrels starts with a few pecans handed over by a colleague in the office. And getting to know AKOKO starts with exquisite nine-grid photos in Moments, recommendations from food influencers you follow, and high-liked answers under the Zhihu question "What snacks are good-looking, delicious, and suitable for gifts?" Content is the channel. The channels of the food industry are no longer traditional online and offline, but are virtualized and content-ized into countless information sources like capillaries. "Appearance is influence, and internet celebrities are productivity." AKOKO founder Keke cooperated with some self-media accounts and KOLs in food and lifestyle from the beginning for promotion, covering almost all food public accounts at the most frenzied time. Relying on overwhelming content, Keke seized the dividend of the "internet celebrity economy." But as followers caught up, the quotes from self-media accounts rose, and the media offensive based on quantity made customer acquisition costs too high. "This is actually a dividend. We ate the lowest-priced wave. This dividend opened and closed again. Now burning money will burn ourselves." So they changed strategy, seizing the trend when self-media began seeking monetization channels, turning the "pay for promotion" cooperation into "distribution," turning the channels where they used to spend money on advertising into channels for selling goods. The team could set different purchase prices based on data such as fan quality and conversion rates. In addition to self-media, the team also set gameplay according to the internal logic of content platforms: Douban for hot topics, Zhihu for Q&A. They found a group of KOLs on Douban and Zhihu and developed them into their Taobao affiliates. On Douban, they created hot topics to attract discussion. On Zhihu, they did Q&A, such as "What are the most beautiful snacks on Taobao?" and "What gift is suitable for a girlfriend?" Zhihu's logic is that the higher the weight of the KOL who answers, the higher the position on the homepage. So these KOLs would appear in the answer, raising the weight and increasing exposure. "How to keep an answer first? Find KOLs to like it every now and then." More importantly, because of its original content, Zhihu also enjoys high weight on Baidu search pages. And the promotion effect is more cost-effective than Baidu's own promotion. This also incubated a business model: the brand hands this work to an intermediary, and the intermediary just needs to circle a group of KOLs. More and more brands are flocking to such platforms, and many traditional marketing companies have begun to make this their main business. If only relying on these content offensives, the efficiency of traffic monetization might not be high enough. This summer, AKOKO entered Tmall and defeated the category leader, Hong Kong's Jenny Bakery, in 40 days. Behind this was a channel traffic offensive and defensive battle. Back then, "Three Squirrels" stood at the dividend entrance of Taobao, relying on a customer acquisition cost of a few cents, pulling in tens of millions of users within a year or two. Now Tmall's traffic is so expensive that ordinary small and medium brands are discouraged, and customer acquisition costs have increased nearly a hundredfold, requiring 50 to 60 yuan per person. What to do? Introduce low-cost traffic from outside the site to fight inside the site. At that time, Toutiao opened a general plan to Tmall and JD.com, allowing platform authors to include product links in articles. When readers placed orders through the links, authors could get a 20% to 30% commission. Keke immediately circled three to four hundred food and column accounts, and within just 5 to 10 days, a large amount of traffic was brought in. After taking the category first place, they cultivated weight and then used weight to suppress some merchants on the site. For example, for direct traffic bidding, if a newly entered cookie brand wanted to appear first in cookie searches, a single click would cost 4 to 5 yuan, but it might take 100 clicks to achieve one purchase. Calculated this way, the customer acquisition cost would be 400 yuan. But for AKOKO, it only needed to pay a very low cost to hold the first position. "Not being kidnapped by channels, acquiring customers comfortably," this is Keke's standard for choosing channels. "Every channel should make money, not burn money. Relying on capital and channels to save us is like calling them 'daddy.' If you have 'daddies' everywhere, that's not right." This is also why AKOKO has not yet given up on WeChat business and interest community KOLs, because these two channels bring their own traffic, with zero customer acquisition cost, and what is paid is only a portion of the profit. Next is grafting with capital to obtain the desired track resources. AKOKO values the channel and media resources of investors. "On the channel side, for example, who invested in Pinduoduo, Xiaomi, Mogujie. On the media side, first see if there is good content that can output good reports and materials, and second see if there is a complete communication chain." Channel resources do sales, while media resources can do premium. "Now channels are hard to distinguish; just see where the mainstream traffic entrance is. We find the mainstream content traffic entrance, then only do content, and convert the traffic dividend into our sales pool." Channel Game Field For most small and medium brands in the industry, AKOKO is a strong brand with strength and channel negotiation power. But twenty years ago, strong brands referred to giants like Wahaha. Wahaha could achieve "in China, wherever there is a small shop, you can see Wahaha's products." But this is destined not to be a game that small players can play. On the one hand, because channel costs are too high. "Three Squirrels" could play the high-end nut card, but Chacha, also in Anhui, could not, mainly due to channel costs. Traditional channels entering supermarkets require a premium of more than 2 times, including channel protection fees, shelf space, entry fees, and shrinkage. A pack of nuts originally priced at 20 yuan would become 60 to 70 yuan, pushing the price very high. On the other hand, because of its settlement method. For example, Wumart supermarket requires suppliers to settle once a year. This is irrelevant for brands like Wahaha and Nongfu Spring because their capital chain is sufficient to support 100 Wumart supermarkets, but for startup companies, this is an unbearable burden. Small brands blocked at the door of traditional supermarkets are the resources that vertical e-commerce channels are desperately seeking. The maternal and infant B2B platform Haipaike has 50,000 stores nationwide and strong selling capabilities. The platform divides mature brands and non-well-known brands into Category A and Category B. Haipaike COO Xu Hong revealed: There is not much room for Category A mature brands to operate on the platform. "Because they are too transparent," these products are basically consumer-driven. For channels, to support various costs, if they mainly operate such volume products, although they can see a lot of turnover, they cannot make money. So the platform's biggest goal now is to find a batch of products with relatively low brand awareness but high gross profit margins. They sign exclusive distribution agreements with small brands that have not yet established channels, and quickly expand using some marketing strategies. This is also why many brands are willing to cooperate with vertical e-commerce platforms, because while occupying channels, they can also make up for shortcomings in sales and operations. Mengmian Babi is a very successful case. This children's noodle brand founded by a post-80s dad was accidentally discovered by Haipaike's product manager during a market inspection. Now, through the Haipaike platform, monthly sales can reach 200,000. Another product, Gubei Yi Teething Biscuits, previously existed only in unnoticed corners of Auchan shelves, but later became the most successful star product operated by Haipaike last year, with monthly sales exceeding 600,000. But as Xu Hong said: "This is an era of product surplus." Behind the selling ability, the posture of strong channels towards brands is becoming more and more obvious. For small and medium brands, negotiation with channels is a difficult journey full of compromise and persistence, and price control is the hardest part. The health-focused "Acijiang" sausage targets the mid-to-high-end crowd, with two packs of 400g priced at 128 yuan. When entering vertical e-commerce channels, they are always asked to lower prices. Every time, they have to spend a lot of time explaining to the channel how their products differ from the dozens of yuan per jin on Taobao. In the end, they have to rely on sales to solve the problem. If sales do not meet expectations, the brand has to face the choice of lowering quality or withdrawing from the channel. The opposition between strong and weak is constantly changing. Keke told Zinc Finance a story: AKOKO cooperated with Hema Fresh, and they needed to ship goods from Hangzhou to Beijing. At that time, their warehouse entry time was scheduled for around 2 pm. Once they arrived a little late, the other party refused to accept the goods. The channel side asked them to return and start over at the warehouse door. There was no room for negotiation. They had to go back to Hangzhou, re-coordinate the warehouse entry time, arrange special personnel from Deppon Logistics, and the brand sent people to follow the truck, arriving at the Hema warehouse two hours early to wait. As soon as the warehouse door opened, they went in immediately. The whole process was nerve-wracking. "They have many strong points," but AKOKO hopes to increase the proportion of this channel (Hema Fresh and Super Species) from 5% to 10%. Competition in new channels is fiercer than imagined. An insider in the office self-service convenience shelf industry told Zinc Finance: Brands like Coca-Cola and Uni-President are even willing to offer lower prices than first- and second-level agents on the market. "Because traditional channels are already solidified, they need such incremental channels more." At the same time, Xixi, a food channel buyer at Haipaike, came to a small food factory in Shaoxing, Zhejiang Province, to inspect the production workshop of a small corn biscuit. Her schedule for next week is still full; she will go to Shandong and Guangdong to find suitable noodle, biscuit, and rice flour brands. This is a scene that traditional brands and channels find incredible. In this era of never lacking products, the once high-and-mighty channels will spend a lot of time and energy to find and inspect these small brands that almost no one has heard of. The "small food era" of constantly opening new channels is like a newly discovered new continent: full of opportunities and risks. "Extraordinary Marketing" mentioned that Zong Qinghou's most typical channel change was to collect deposits from channel merchants to ensure the stability of channel partners. This year, Haipaike also began to charge brands a 15,000 yuan deposit, hoping that after paying the time and cost of product selection, it can ensure the stability of brands within the channel. In the "small food era" waiting for the explosion of 100-billion-level food enterprises, the game between channels and brands will continue. Source: Zinc Finance (ID: xincaijing) -END-